N.C. House OKs amendment giving film incentives a lifeline

Published: Thursday, July 31, 2014 at 11:06 a.m.

Last Modified: Thursday, July 31, 2014 at 3:36 p.m.

The debate was passionate, heated and – at times – pointed.

But the end result of the vote in the N.C. House on Thursday afternoon was that the state's film incentive program still has life after the chamber adopted an amendment by state Rep. Ted Davis Jr., R-New Hanover, to extend the existing program until January 2016.

After another House vote Friday the amendment is expected to be taken up by the Senate, where support for film has been lukewarm at best.

Still, film backers were excited – and relieved – by Thursday's outcome.

“It's another good step forward,” said Johnny Griffin, director of the Wilmington Regional Film Commission and who was at the General Assembly on Thursday. “(We're) looking for support from the Senate now.”

Bill Vassar, executive vice president of EUE/Screen Gems Studios, said he was thrilled and happy about “the miracle that occurred this afternoon.”

“We hope our colleagues in the N.C. Senate will see the same value in this bill as it moves forward,” he said in a statement.

'Death penalty'

The film tax credit program, which expires at the end of the year, is slated to be replaced by a $10 million grant program for the first six months of 2015 – with no money earmarked for the program after June 2015. That language came out of the compromise budget bill crafted together earlier this week by House and Senate negotiators.

But Davis, speaking on the House floor Thursday, said the $10 million grant program “simply will not work. It is the death penalty.”

At a time when the state is focusing so much attention on attracting businesses to North Carolina, the New Hanover County Republican said, legislators shouldn't be looking to gut a program that supports 4,200 jobs across the state.

“Don't let this legislative session go down as killing the film industry in our state,” he said.

Along with extending the current program by one year, the provision would cap the credit amount for the year at $40 million – the current program has no cap – and reduce the refund on qualifying expenses from 25 percent to 22.5 percent.

The amendment also would lower the amount a single film or television production could get from $20 million to $15 million and require another study of the N.C. film industry to gauge its true statewide impact.

The provision was added to a Senate bill on revenue laws, which includes language to continue tax credit programs for solar energy and historic preservation.

“This is a program that's working,” said Rep. Charles Jeter, R-Mecklenburg, in advocating for the amendment. “Sure, it can be tweaked. But you're talking about real jobs.”

Southeastern North Carolina and Mecklenburg County, which is home to Charlotte, have the lion's share of film and television production in the state.

'It is a turkey'

But opposition to film incentives in Raleigh has been widespread and vocal this session, and that was again on display on the House floor Thursday.

Wake County Rep. Paul Stam, the second-highest-ranking Republican in the House, said the money that would be used to subsidize the film industry would be better spent on cutting taxes if people really wanted to create jobs. Or the funds could be used for education which would help more parts of the state, he added.

Stam also railed against the program because it cuts checks for companies that don't even have permanent North Carolina addresses or pay state taxes.

“It is a turkey,” he said of the current tax credit program.

Joining Stam in questioning the film incentive program was Rep. Jeff Collins, R-Nash.

“That $40 million doesn't come out of thin air,” he said, noting that any industry would be happy to come and set up shop in North Carolina if the taxpayer offered them a 25 percent tax rebate. “I've got to look out for people in my district.”

Rep. Michael Speciale, R-Craven, also spoke out against the film program.

“If the film industry couldn't survive and make money in North Carolina, then they wouldn't be here,” he said. “If it takes us $40 million to keep them here, then we've got a problem. We need to focus on other industries.”

In 2013, the film industry spent $244 million in North Carolina with more than 30 qualifying productions receiving just over $61 million from the incentive program, according to film audit reports. The previous year, the local industry's biggest, saw $334 million in spending and $83 million in tax credits.

'Get it right'

But House Speaker Thom Tillis, R-Mecklenburg, who has supported the film industry in past legislative fights, came out in strong support of Davis' amendment on Thursday.

“I firmly believe this is an important policy for us,” the Speaker said.

Tillis said one of the issues that made film such a tough business for legislators to get their hands around is that it doesn't operate as a typical project-based industry. Because of that, it can be hard to quantify and visualize the film industry's true economic impact in the state. Tillis also said there was no reason North Carolina couldn't eventually emulate Georgia and Tennessee, states that have both competitive tax rate structures and competitive film incentive programs.

To that end, the Speaker said he supported an extension of the credit program by one year to allow legislators to come back next year and have enough time during the long session – which starts in January – to study it and “get it right” rather than the all-or-nothing approach that's facing officials now.

Tillis, who is running as the Republican challenger to U.S. Sen. Kay Hagan, D-N.C., in November, also said coming back next year would allow members to study it in a less politically charged environment.

When asked whether the Senate would support the idea of extending the film incentives, the Speaker paused for a second.

“The Senate works in mysterious ways,” Tillis said.

But, he added, if the House didn't pass this amendment then there would be no vehicle for discussion with the other chamber.

Local support

Rep. Frank Iler, R-Brunswick, joined Davis in speaking passionately on the House floor in favor of the amendment.

Also voting for the provision, which passed 77 to 36, was Rep. Susi Hamilton, D-New Hanover.

“I am ecstatic about the bipartisan outcome of today's vote to extend the historic preservation, solar energy and film tax credits,” Hamilton said. “Each of these programs employ thousands of North Carolinians, and bring hundreds of millions of dollars to this state. It's a win for N.C. today that will continue to make us competitive for job retention and creation.”

Rep. Rick Catlin, R-New Hanover, also supported the provision.

Catlin, who has drawn criticism about his wavering stance on the film industry, said he backs the industry but also feels it is part of his job to pursue the facts about its impact.

“I thought Davis' amendment was a good compromise,” Catlin said, adding that the extension proposed in the amendment would allow further opportunity to look at the impact of the industry.

The only member of the local delegation to vote against the amendment was Rep. Chris Millis.

But the Pender County Republican stressed his vote wasn't because he's against the film industry. He said he couldn't philosophically support a program that offered a tax break that wasn't available to everyone.

<p>The debate was passionate, heated and – at times – pointed.</p><p>But the end result of the vote in the N.C. House on Thursday afternoon was that the state's film incentive program still has life after the chamber adopted an amendment by state Rep. Ted Davis Jr., R-New Hanover, to extend the existing program until January 2016.</p><p>After another House vote Friday the amendment is expected to be taken up by the Senate, where support for film has been lukewarm at best.</p><p>Still, film backers were excited – and relieved – by Thursday's outcome.</p><p>“It's another good step forward,” said Johnny Griffin, director of the Wilmington Regional Film Commission and who was at the General Assembly on Thursday. “(We're) looking for support from the Senate now.”</p><p>Bill Vassar, executive vice president of EUE/Screen Gems Studios, said he was thrilled and happy about “the miracle that occurred this afternoon.”</p><p>“We hope our colleagues in the N.C. Senate will see the same value in this bill as it moves forward,” he said in a statement.</p><h3>'Death penalty'</h3>
<p>The film tax credit program, which expires at the end of the year, is slated to be replaced by a $10 million grant program for the first six months of 2015 – with no money earmarked for the program after June 2015. That language came out of the compromise budget bill crafted together earlier this week by House and Senate negotiators.</p><p>But Davis, speaking on the House floor Thursday, said the $10 million grant program “simply will not work. It is the death penalty.”</p><p>At a time when the state is focusing so much attention on attracting businesses to North Carolina, the New Hanover County Republican said, legislators shouldn't be looking to gut a program that supports 4,200 jobs across the state.</p><p>“Don't let this legislative session go down as killing the film industry in our state,” he said.</p><p>Along with extending the current program by one year, the provision would cap the credit amount for the year at $40 million – the current program has no cap – and reduce the refund on qualifying expenses from 25 percent to 22.5 percent.</p><p>The amendment also would lower the amount a single film or television production could get from $20 million to $15 million and require another study of the N.C. film industry to gauge its true statewide impact.</p><p>The provision was added to a Senate bill on revenue laws, which includes language to continue tax credit programs for solar energy and historic preservation.</p><p>“This is a program that's working,” said Rep. Charles Jeter, R-Mecklenburg, in advocating for the amendment. “Sure, it can be tweaked. But you're talking about real jobs.”</p><p>Southeastern North Carolina and Mecklenburg County, which is home to Charlotte, have the lion's share of film and television production in the state.</p><h3>'It is a turkey'</h3>
<p>But opposition to film incentives in Raleigh has been widespread and vocal this session, and that was again on display on the House floor Thursday.</p><p>Wake County Rep. Paul Stam, the second-highest-ranking Republican in the House, said the money that would be used to subsidize the film industry would be better spent on cutting taxes if people really wanted to create jobs. Or the funds could be used for education which would help more parts of the state, he added.</p><p>Stam also railed against the program because it cuts checks for companies that don't even have permanent North Carolina addresses or pay state taxes.</p><p>“It is a turkey,” he said of the current tax credit program.</p><p>Joining Stam in questioning the film incentive program was Rep. Jeff Collins, R-Nash.</p><p>“That $40 million doesn't come out of thin air,” he said, noting that any industry would be happy to come and set up shop in North Carolina if the taxpayer offered them a 25 percent tax rebate. “I've got to look out for people in my district.”</p><p>Rep. Michael Speciale, R-Craven, also spoke out against the film program.</p><p>“If the film industry couldn't survive and make money in North Carolina, then they wouldn't be here,” he said. “If it takes us $40 million to keep them here, then we've got a problem. We need to focus on other industries.”</p><p>In 2013, the film industry spent $244 million in North Carolina with more than 30 qualifying productions receiving just over $61 million from the incentive program, according to film audit reports. The previous year, the local industry's biggest, saw $334 million in spending and $83 million in tax credits.</p><h3>'Get it right'</h3>
<p>But House Speaker Thom Tillis, R-Mecklenburg, who has supported the film industry in past legislative fights, came out in strong support of Davis' amendment on Thursday.</p><p>“I firmly believe this is an important policy for us,” the Speaker said.</p><p>Tillis said one of the issues that made film such a tough business for legislators to get their hands around is that it doesn't operate as a typical project-based industry. Because of that, it can be hard to quantify and visualize the film industry's true economic impact in the state. Tillis also said there was no reason North Carolina couldn't eventually emulate Georgia and Tennessee, states that have both competitive tax rate structures and competitive film incentive programs.</p><p>To that end, the Speaker said he supported an extension of the credit program by one year to allow legislators to come back next year and have enough time during the long session – which starts in January – to study it and “get it right” rather than the all-or-nothing approach that's facing officials now.</p><p>Tillis, who is running as the Republican challenger to U.S. Sen. Kay Hagan, D-N.C., in November, also said coming back next year would allow members to study it in a less politically charged environment.</p><p>When asked whether the Senate would support the idea of extending the film incentives, the Speaker paused for a second.</p><p>“The Senate works in mysterious ways,” Tillis said.</p><p>But, he added, if the House didn't pass this amendment then there would be no vehicle for discussion with the other chamber.</p><h3>Local support</h3>
<p>Rep. Frank Iler, R-Brunswick, joined Davis in speaking passionately on the House floor in favor of the amendment.</p><p>Also voting for the provision, which passed 77 to 36, was Rep. Susi Hamilton, D-New Hanover.</p><p>“I am ecstatic about the bipartisan outcome of today's vote to extend the historic preservation, solar energy and film tax credits,” Hamilton said. “Each of these programs employ thousands of North Carolinians, and bring hundreds of millions of dollars to this state. It's a win for N.C. today that will continue to make us competitive for job retention and creation.”</p><p>Rep. Rick Catlin, R-New Hanover, also supported the provision.</p><p>Catlin, who has drawn criticism about his wavering stance on the film industry, said he backs the industry but also feels it is part of his job to pursue the facts about its impact.</p><p>“I thought Davis' amendment was a good compromise,” Catlin said, adding that the extension proposed in the amendment would allow further opportunity to look at the impact of the industry.</p><p>The only member of the local delegation to vote against the amendment was Rep. Chris Millis.</p><p>But the Pender County Republican stressed his vote wasn't because he's against the film industry. He said he couldn't philosophically support a program that offered a tax break that wasn't available to everyone.</p><p>“I just want to have it apply uniformly to all,” Millis said.</p><p><i></p><p>Staff writer Hunter Ingram contributed to this story.</i></p><p><a href="http://www.starnewsonline.com/section/topic9924"><b>Gareth McGrath</b></a>: 343-2384</p><p>On <a href="http://www.starnewsonline.com/section/news41"><b>Twitter</b></a>: @Gman2000</p>